Sparkfun has an interesting article on something they call, the “pit of despair.” It’s the point of volume production where you’re more than you can make easily at home, less than you can go directly to a contract manufacturer, and right at the point where you’re not making enough money to quit your day job but you’ve committed yourself to a lot of work. It’s an awful place to be.
The problem with small hardware startups is that it’s all too easy for them to get into this space. They start off making prototype units, selling them at a loss or tiny profit. Then as they scale up with glimmers of mass production in their eyes they hit this pit along the way, where they can’t afford to get a factory and their volumes aren’t high enough for one anyway. They’re stuck, and quality suffers, and there’s no time to do development to improve the product. The only way out of the pit is with a large infusion of cash or popularity (which brings with it cash).
From the article:
A surprising amount of products fall into the third bucket. I call this bucket the pit of despair. These products get far more attention than the creator(s) expected. The product was well-designed but may have been designed for kitchen production, where they planned to build tens of units. When demand grows beyond thousands, the creators are often forced to make tough decisions: the income may not be enough to release them from their day job, and the amount of time required to build the product begins to gobble up evenings and entire weekends.
Read the full story at Sparkfun: Pit of Despair